Practice question
A corporation validly issues no-par shares at P20 each. Its board proposes treating only P5 per share as capital and distributing the other P15 as dividends solely because it exceeds the minimum issuance amount. Which is correct?
- Only the minimum P5 must ever be capital
- The excess is automatically unrestricted retained earnings
- The entire consideration received for no-par shares is capital and unavailable for distribution as dividends
- No-par proceeds can never be recorded
- The subscriber personally owns the excess cash
Legal references
- https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463 — RA 11232, section 6
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